Money News
Budget 2007 has confirmed the death warrant for pension term assurance that appeared in the Pre Budget Report in 2006, unless the insurer received the application for the policy before 14 December 2006 and the policy was taken out as part of your pension scheme before 6 April 2007.
The measure removes your entitlement to tax relief on any pension contributions you pay that are used to fund personal term assurance policies. It does not affect the relief available for contributions paid by employers.
Where relief remains available for contributions paid on or after 1 August 2007 (for occupational schemes) or on or after 6 April 2007 (for other schemes), the individual will cease to be entitled to relief if the policy to which the contribution relates is varied outside its original terms so as to increase the sum assured or lengthen the term. However, if there is an option under the policy which is then exercised this will not affect the relief due.
The change to be introduced in Finance Bill 2007 will mean that individuals will no longer get tax relief on pension contributions that are used to pay premiums under personal term assurance policies. A term assurance policy will be regarded as personal to the individual if it terminates the first time an insured person dies, as with all single life policies and most joint life policies, or if all the insured individuals are members of the same family.
The Finance Bill legislation will also provide new powers to pass secondary legislation which will enable the Government to act quickly to remove relief from new products sold with a view to avoiding the new restrictions on tax relief.
22 March 2007 © Moneyextra.com
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